Bitcoin (BTC) fell toward $84,000 Thursday as a sharp selloff in U.S. government bonds sent Treasury yields to multi-decade highs, abruptly cooling a crypto rally that had pushed the world’s largest cryptocurrency above $87,000 earlier this week.
Bitcoin fell roughly 2% after recently touching an eight-month high near $87,300. The pullback spread across crypto, with Ethereum, XRP and Dogecoin also falling as investors confronted a familiar threat: higher interest rates and increasingly attractive yields on safer government debt.
Treasury Yields Slam the Crypto Rally
The 10-year Treasury yield climbed above 5.1%, reaching its highest level since 2007, while the 30-year yield approached 5.44%, its highest since 2004. The surge followed stronger economic data, renewed pressure from oil prices and weak demand at a $70 billion auction of five-year Treasury notes.
That combination is particularly difficult for Bitcoin. Higher Treasury yields increase the appeal of income-producing government debt relative to assets that generate no yield, while rising borrowing costs can also force traders to reduce leveraged positions. Bitcoin’s decline accelerated as yields moved higher, reversing some of the momentum that had driven the cryptocurrency from below $76,000 last week to more than $87,000 by Tuesday.
Fed Rate-Hike Fears Return
The bond selloff is also forcing investors to rethink how much further the Federal Reserve could tighten monetary policy. The Fed raised interest rates by 25 basis points last week, its first increase since 2023. Strong economic activity and persistent inflation pressures are now fueling expectations that additional tightening could follow, with traders increasingly pricing in multiple rate increases over the coming months.
For Bitcoin, that represents a significant change in the macro backdrop. The cryptocurrency managed to rally immediately following the Fed’s latest increase, but a prolonged period of rising rates and yields could make it more difficult for speculative assets to sustain their recent momentum.
Bitcoin’s Breakout Hits a Wall
Thursday’s retreat comes only days after Bitcoin staged one of its strongest rallies in months. The cryptocurrency climbed above $86,000 Monday and briefly topped $87,000 on Tuesday, reaching its highest level since January.
The move had been supported by renewed institutional demand, short covering and improving sentiment following recent regulatory developments. Bitcoin gained more than 30% from its August lows, while crypto-linked stocks including Coinbase and Strategy also rallied. But the latest reversal highlights how dependent Bitcoin remains on broader financial conditions. Earlier this week, falling Treasury yields and easing oil prices helped fuel the rally. With both pressures reversing, traders have quickly become more cautious.
Crypto Selloff Spreads Beyond Bitcoin
Bitcoin was hardly alone Thursday. Ethereum fell roughly 2%, while XRP suffered a steeper decline and Dogecoin dropped more than 5% as traders moved away from higher-risk cryptocurrencies. The total cryptocurrency market capitalization fell roughly 2.5% to about $2.93 trillion. The heavier losses across altcoins and meme coins suggest investors are cutting exposure most aggressively in the speculative end of the market rather than abandoning crypto altogether. Another potential volatility catalyst is approaching quickly. A large batch of Bitcoin options is scheduled to expire Friday, which could amplify price swings as traders adjust positions around major strike prices.
Looking Ahead
Bitcoin’s ability to stabilize around $83,000 to $84,000 will be closely watched after its rapid retreat from $87,000. The bigger question, however, may be what happens in the Treasury market. If the 10-year yield remains above 5% or continues climbing, Bitcoin could face continued pressure as investors demand higher returns for holding riskier assets. At the same time, the underlying crypto rally has not completely disappeared. Institutional demand and the rebound from August’s lows remain supportive, but Thursday’s selloff is a reminder that Bitcoin’s next major move may depend as much on bonds, inflation, and the Fed as anything happening inside the crypto market itself.